RE: Simply Wall Street29 Jun 2018 12:16
Bigblu Broadband plc (LON:BBB): Should The Recent Earnings Drop Worry You?
18 Jun 2018
Despite a decline, did BBB underperform the long-term trend and the industry?
BBB is loss-making, with the most recent trailing twelve-month earnings of -UK£7.63m (from 30 November 2017), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -UK£4.55m. Each year, for the past five years BBB has seen an annual increase in operating expense growth, outpacing revenue growth of 52.25%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Viewing growth from a sector-level, the UK telecom industry has been growing its average earnings by double-digit 18.38% over the past twelve months, and 12.04% over the last five years. This suggests that whatever uplift the industry is profiting from, Bigblu Broadband has not been able to leverage it as much as its industry peersSince Bigblu Broadband is currently unprofitable, with operating expenses (opex) growing year-on-year at 25.00%, it may need to raise more cash over the next year. It currently has UK£3.45m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached UK£23.60m in the latest twelve months. Even though this is analysis is fairly basic, and Bigblu Broadband still can cut its overhead in the near future, or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
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